June 25, 2010
The Jones Act ship law has outlived its usefulness
THE JONES ACT is a vestige of the post-World War I years, when the vulnerability of U.S. shipping to German U-boats was still fresh in the public’s mind. To maintain a “dependable” merchant fleet for the next “national emergency,” Congress restricted coastal shipping between U.S. ports to U.S.-built vessels owned by U.S. citizens; related laws require U.S. crews. The Jones Act may or may not have achieved its original purpose, but shipping businesses and labor unions love the way it shields them from foreign competition.
Today the Jones Act stands accused of hindering the gulf oil spill cleanup. Republicans say that President Obama should have used his emergency power to waive the law — as President George W. Bush did after Hurricane Katrina — but hesitated to do so in deference to organized labor. The Obama administration denies it. “There has not been any problem with this,” White House press secretary Robert Gibbs said last week.
Who’s right? The administration’s critics exaggerate the Jones Act’s impact on the cleanup. It applies within only a three-mile band of coastal water. Even if President Obama had immediately waived the law, it wouldn’t have affected the skimming and scooping of most of the oil, which is floating dozens of miles offshore. The inapplicability of the Jones Act to the spill area helps explain why 15 foreign-flagged vessels have indeed been cleared to operate in the Gulf of Mexico.
That doesn’t mean that the Jones Act is harmless. To the contrary, like other protectionist laws, it increases the price of goods and services to American consumers — though how much is a matter of debate, because foreign vessels would still have to comply with other laws and regulations that add to their costs. The Jones Act was an issue in the May 22 House special election in Hawaii: Both Republican winner Charles Djou and one of his two Democratic opponents charged that it benefited a handful of ship lines and unions at the expense of ordinary Hawaiians. Mr. Djou is preparing a bill to exempt Hawaii. If FedEx can move cargo across the country in European-made Airbuses, why can’t a boat built in, say, Canada, ship wheat from Los Angeles to Honolulu? The Jones Act lobby crushed the last attempt at reform back in the 1990s. May the next one meet with more success.